Money flows back into corporate debt

Mutual and ETFs (LQD) focused on investment grade corporate debt reported $639M of net inflows last week, the largest gain in over 2 months, according to BAML. In the 10 weeks previous, investors had pulled a net $8.3B out of these fixed-income funds. High yield funds (HYG, JNK) attracted $566M last week.

The move comes has the IG yield spread to Treasurys has slipped 19 bps since hitting a 9-month high of 172 in late June.

"There are signs of life," says one fund manager. "People are expecting tapering and are getting out of Treasurys" and into higher yielding assets.